FTC Slams Google for Seeking iPhone, iPad Ban

The Federal Trade Commission is backing Apple in the company’s battle with Google over standard-essential patents (SEP), arguing that any attempt to ban a product for allegedly infringing an SEP “risks harming competition, innovation, and consumers.”

In an amicus brief filed late Wednesday with the U.S. Federal Circuit Court of Appeals, the trade agency argued that a district court was right to dismiss a request by Google’s Motorola Mobility division for an injunction against sales of the iPhone and iPad in the United States.

The patents Motorola had attempted to assert against Apple were SEPs, which it is obligated to license on fair, reasonable and non-discriminatory terms. And in the FTC’s eyes, using the threat of SEP-based injunctions to demand higher royalties or other favorable licensing terms is bad business. It’s a “patent hold-up,” to quote the agency’s term.

“Hold-up and the threat of hold-up can deter innovation by increasing costs and uncertainty for other industry participants, including those engaged in inventive activity,” the FTC said in its brief. “It can also distort investment and harm consumers by breaking the connection between the value of an invention and its reward — a connection that is the cornerstone of the patent system.”

But above all, patent hold-ups may undermine the value of standard setting, and that by extension could reduce interoperability, which isn’t good for anyone.

And in the end, disagreements over SEPs are better settled by financial means. By agreeing to license IP as an industry standards, companies who do so — like Google — have already acknowledged that they can be properly compensated by a royalty. So seeking an injunction against an allegedly infringing product is really just overkill. If there are damages in cases like these, they should be monetary.

It’s worth noting that this isn’t the first time the FTC has sounded off on SEP-driven lawsuits and Google’s efforts to use them to enhance its negotiating stance. Back in June, the agency told the International Trade Commission that Google’s request for import bans against Microsoft’s Xbox and Apple’s iPhone for their alleged infringement of its SEPs could hurt competition.

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